History of Economic Planning In India

Introduction:
Economic Planning in India dates back to pre- Independence period when leaders of the freedom
movement and prominent industrialists and academics got together to discuss the future of India after
Independence which was soon to come.

Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of economic planning in
India. His book “Planned Economy for India” published in 1934 suggested a ten year plan, with an outlay
of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based on economic
conditions of the time.

The Industrial Policy Statement published just after independence in 1948 recommended setting up of a
Planning Commission and following a mixed economic model. Here are the major milestones related to
economic planning in India:

Setting up of the Planning Commission: 15 March 1950

First Five Year Plan: 1 April 1950

Dissolution of the Planning Commission: 13 August 2014

Setting up of NITI (National Institution for Transforming India) Aayog: 1 January 2015

Setting up the NITI Aayog was a major step away from the command economy structure adopted by
India till 1991. The Planning Commission’s top down model of development had become redundant due
to present economic conditions and NITI Aayog approaches economic planning in a consultative manner
with input from various state governments and think tanks.

KEY POINTS: HISTORY OF PLANNING IN INDIA

 First attempt to initiate economic planning in India was made by Sir M Visvesvaraya, a noted
engineer and politician, in 1934, through his book, ‘Planned Economy for India’.
 In 1938, National Planning Commission was set-up under the chairmanship of Jawaharlal Nehru
by the Indian National Congress.
 Its recommendations could not be implemented because of the beginning of the World War II and
changes in the Indian political situation.
 It stated that the objective of planning was to ensure an adequate standard of living for the
masses. It emphasized on heavy industry and land reforms.
 In 1944, Bombay Plan was presented by 8 leading industrialists of Bombay including JRD Tata,
GD Birla and others. It saw future progress based on textile and consumer industries and saw an
important role for the state in post independent India.
 In 1944, ‘Gandhian Plan’ was given by Shriman Narayan Agrawal. It emphasised decentralisation,
agricultural development, cottage industries etc.
  In 1945, People’s Plan was given by MN Roy.
 In 1950, Sarvodaya Plan was given by Jai Prakash Narayan. A few points of this plan were
accepted by the government.

IMPORTANT DATES

 1934 – Sir M.Visvesvaraya in his book Planned Economy of India advocated the necessity of
planning in the country much before independence.
 1944 – The Planning and Development Department was set up under the chairmanship of Sir
Ardeshir Dalal.
 1946 – The Interim government set up the Planning Advisory Board.
 1947 – The Economic Program Committee was set up under the chairmanship of Pandit
Jawaharlal Nehru.
 1950 – The Planning Commission was set up after independence.
 1965 – The National Planning Council was established
 2015 – The NITI Aayog replaces the Planning Commission.

− Economic self-reliance, meaning avoiding import which can be produced in India.

− Equity implying equitable distribution of wealth with social justice.

− Economic stability which means controlling inflation and unemployment.